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Destroying the Consumer Financial Protection Agency – Piece by Piece

Note- this blog was updated on December 8, 2017, with a few corrections, and additional links. Still it’s all pretty damning evidence that Mulvaney has no interest in protecting consumers in real estate related transactions. Obviously, neither does Trump.

Mike Mulvaney does not believe in the bureau he has been appointed to run. In public statements, he clearly does not feel the government should be protecting the consumer in complicated financial transactions, typically mortgages. He has declared it a “sad, sick” example of bureaucracy gone amok. (see New York Times article) Judging by the number of successful prosecutions in support of consumers, it appears Mulvaney is wrong.

Nationwide Biweekly Administration (NBA) was accused by CFPB of widespread fraud, involving more than 100,000 mortgage customers. NBA has nothing to do with Nationwide Insurance, and its sole business is convincing mortgage holders that it is in their best interest to pay off their mortgages on a biweekly basis, resulting in 13 payments instead of 12, which the company would pocket.

The scam involved false advertising, promising customers that Nationwide would reduce their interest payments. It involved mass mailings as as many as 33 million mailers were sent out. Through billing the customers for 26 biweekly payments, the company would collect one extra monthly payment. Nationwide retains the first mortgage payment as a setup fee which can be up to $995 according to the CFPB. Plus they would add other service fees, increasing their mortgage payments to consumers.

It is an egregious ripoff and was found in violation of the laws and regulations protecting consumers. The CFPB alleges these practices violate the Telemarketing Sales Rule and the Consumer Financial Protection Act’s prohibition against unfair, deceptive or abusive acts or practices. See the government’s lawsuit against Nationwide.

Daniel Lipsky is the founder, president, and sole owner of Nationwide. He reportedly made 33 million dollars from the biweekly payment program. Nationwide Biweekly website link is provided in the links.

CFPB sued Nationwide and had a partial victory in the lawsuit. After lengthy litigation, a judge in September 2017 ordered Nationwide to pay nearly 8 million dollars in penalties. This was far less the 77 million dollars that the CFPB had sued for, which included restitution to its customers. See link at the end of this blog.

CFPB asked for a 8 million dollars in bond, while Nationwide appealed the verdict. This is completely routine to help insure the payment to fraud victims. The case was inches away from the finished line.

Mike Mulvaney arrived last week, determined to make the agency less effective for now and whoever comes after him. He ordered bond request withdrawn destroying . Victims may never get anything from the government’s lawsuit, after three years in the making. According to the Quartz link:

The decision could allow Lipsky to re-open Nationwide, which still has more than 100,000 customers. If the new-look CFPB takes the same approach to his appeals, he may face no penalty at all.

Can you imagine how let down the victims of fraud and CFPB investigators must feel? This action will embolden loan originators and con artists (like Nationwide Biweekly) to once again look for prey.

We’re the CFPB. The Consumer Financial Protection Bureau is a U.S. government agency that makes sure banks, lenders, and other financial companies treat you fairly.

The Consumer Financial Protection Bureau is a 21st century agency that helps consumer finance markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives. For more information, visit:

I could not find the actual judge’s order, but this link provided the 77 million dollar value in the original lawsuit by CFPB. It is written by an attorney who advises real estate professionals, so it has some bias. CFPB makes allegations, and the courts then look at the evidence to decide appropriate penalties. Also note the opinion was as of September 17, 2017 before Mike Mulvaney took charge of the CFPB.